Stimulating Start-up Investment Through Government-Sponsored Venture Capital:Theory and Chinese Evidence

Government-sponsored venture capital(GVC)has been used to support financially constrained start-ups as an important policy tool in China.Typically,to motivate the social capital to invest in start-ups,GVC provides subsidies for them to bridge the funding gap in the early-stage venture capital market.However,the effect and mechanism of GVC affecting social capital investment have not been clearly studied.In this paper,the authors not only develop a game model to analyze this issue in theory,but conduct an empirical study by analyzing the 14741 records matched by propensity score matching(PSM)of Chinese venture capital market data from 2011 to 2021.The proposed findings are as the follows.Firstly,the subsidies offered by GVC will simultaneously increase the returns and risks of investments in start-ups of social capital with more volatile incentive effect of GVC.The incentive effect of GVC is only effective when the returns resulting from the subsidies outweigh the risks they introduce.In the context of the Chinese venture capital market,the incentive effect of GVC is effective.Secondly,the incentive effect of GVC is more pronounced in high-tech industries,which can be attributed to the signaling effect facilitated by GVC.In this context,the subsidy mainly helps social capital to bear the costs associated with screening potential investments.Thirdly,the incentive effect of GVC is more significant in underdeveloped venture capital markets,which can be explained by the“virtuous cycle”effect,in which GVC plays a pioneering role in establishing a more robust early-stage market trading system.By examining these three points,this study contributes to a better understanding of how GVC can effectively guide social capital investment,especially in the Chinese landscape.

Main Factors Affecting the Balance of Investments in Serbia and New Trends of Investment

The importance of investment for the development of some country is undeniable. In today＇s economic conditions, it is necessary to observe all the influencing factors and examine their impact on the investments in the economy of some country. The goal of each country is to create a favorable climate （conditions） for the investments, because they stimulate the growth and development of the country. The aim of this paper is to point of the current situation （the past few years） of the foreign investments in Serbia＇s economy and to highlight the main factors that influenced this situation. In a past few years, there is another trend of unexploited resource of investment seen in Serbia, which is more and more attractive in the region, but unfortunately unjustly neglected in Serbia. These sources are venture capital and private equity funds. Some of the influencing factors that must be emphasized are the country＇s general economic situation, political risks, taxation, the financing of the investments, the government＇s incentives （subsidies）, support from some specialized institutions, etc..